Denim and Lingerie are Paying Off for American Eagle

The Pittsburgh-based company reported Wednesday that net revenue increased 3 percent to $823 million from $797 million last year. This just squeaked by the 2.8% that analysts polled by Thomson Reuters were expecting.

The company’s Aerie brand of lingerie once again proved to be a star performer, posting robust sales growth of 24 percent. American Eagle’s namesake brand grew just 1 percent during the same time period.

While other teen retailers have struggled to regain market share, American Eagle has successfully pivoted by streamlining its assortment, renewing its focus on the jeans that made the brand a household name.

Aerie, meanwhile, has captivated millennial consumers through a savvy marketing campaign that touts unaltered images of women’s bodies in the company’s lingerie.

American Eagle is also discounting less, citing improved merchandise margins due to higher realized selling prices, although this was partially offset by delivery costs due to an increase in online sales. The company said it expects third-quarter EPS of 40 or 41 cents per share, forecasting a sales bump in the low single digits.

CEO Jay Schottenstein touted the company’s winning strategy in a press release, “For the past few years, we have worked hard to lift our brands through merchandise leadership and innovation, strengthen our customer focus and invest in technology. Our efforts around these priorities are clearly paying off, as again evidenced by our strong earnings growth in the second quarter.”